U.S. Sen. Richard Blumenthal berated the Federal Housing Finance Agency (FHFA) for plans to levy an additional fee on mortgage guarantees for Connecticut homebuyers, with the lender justifying the increase on grounds the state’s foreclosure safeguards tack on more time to any such proceeding.
Blumenthal said FHFA’s argument ignores the benefits to homeowners, lenders and investors that come from having a fair judicial process that treats foreclosure as a last resort.
FHFA controls Fannie Mae and Freddie Mac, which charge lenders a guarantee fee in exchange for assuming the risk that a loan will default. The guarantee protects investors in mortgages and mortgage-backed securities, making it cheaper and easier for home purchasers to get financing. The cost of the guarantee fee is generally passed along to the borrower.
Homebuyers in Connecticut and New York would face a fee increase of 30 basis points, or 0.3 percent, with those in New Jersey, Florida and Illinois also facing higher fees starting in 2013. FHFA is currently soliciting public comment on the proposal.
“Connecticut’s commonsense judicial safeguards protect homeowners from ‘robosigners,’ fraudulent affidavits, and other big-bank tactics,” Blumenthal said in a prepared statement. “FHFA”™s proposed fee will significantly increase costs for all Connecticut consumers trying to achieve the American dream of homeownership.”
